• This comes as part of a larger plan to refit 20 of its floors across the region, to accommodate the changing demand pattern and new office market trends 
  • Over 50 coworking providers are now operating in Dubai making the landscape very competitive – The resulting shrinking margins have caused 25 operators to close over the past 18 months 
  • Company registration on a desk or a virtual office are gradually becoming possible across the region (led by Dubai’s DED initiatives), as authorities increasingly try to support entrepreneurs in keeping overhead costs low and simplify registration

When it officially opens in July, Servcorp Business front in Riyadh will be the latest of Servcorp’s new generation of prime, contemporary and high tech coworking space, that ensued the recent refurbishment of historical floors in Emirates Towers, Boulevard Plaza, Almas Tower, or Al Habtoor in Dubai. The new coworking will be the largest one in the Middle East, comprising of a full building offering high tech solutions across 29,000 sq.f of shared workspace, while providing flexible offices and coworking integrated solutions to all stages of business - from startups and freelancers to fortune 500 companies requiring short leases, adaptable layouts and 24/7 on demand admin and IT support.

David Godchaux, CEO of SERVCORP EMEIA comments: “These investments are exciting news for Servcorp and are being met by the growing demand for flexible workspace fully integrated with technology and services, from large corporate occupiers, SMEs and entrepreneurs. As we continue expanding, our clients are now able to use a powerful ecosystem of over 25 Servcorp floors in the region, from a desk to a well-appointed office, getting instantly connected to 40,000 entrepreneurs and imaginers to buy from and sell to, through a single powerful technology platform. Our clients are provided with a Servcorp support team, IT, PA and receptionist who are seamlessly in touch 24/7 to support as and where required, to allow them to focus on what they do best (their idea or their business), all just at a small fraction of the cost, for less than the price of two or three coffees per day”

The GCC areas indeed are witnessing profound changes in the office market, following and sometimes even leading trends seen in other parts of the world with coworking spaces spreading at a very high pace. Servcorp estimates that flexible workspaces will constitute more than 60% of the total office demand in the GCC by 2025. As the demand exponentially grows for flexible workspace over traditional office space, so does the supply, and the UAE has witnessed a significant inflow of new coworking space operators over the past few years.

As of March 2019, in Dubai alone, there are 50 coworking spaces, and over 80 serviced office providers. In this landscape that has become very competitive in the recent years, margins have significantly shrunk for all players as office rental rates were decreasing in Dubai and Abu Dhabi. Many coworking space and serviced office providers are not able to survive this complex environment and race to bottom by quickly reducing pricing in a fierce competition. This price war has led many of these new operators to close a few years after they open - in the UAE alone, over 25 business center operators ceased operations within the past 18 months, and the numbers are expected to further increase by 2020.

David Godchaux comments: “The strategy and solution for Servcorp has been to stay away from the price war and the race to the bottom. We continue investing in our A grade locations, fitting the space with the latest technology available, and offering services that add real depth to the real estate offering: it is not difficult to build a coworking space that looks pretty on the surface, but companies, small or big, value much more than a nice desk in a pretty fit-out.  They want an integrated ecosystem to plug into, seamlessly, to sell to other entrepreneurs and companies, while lowering their overhead costs with real quality support – all in a flexible manner, with no long term commitment to salaries or employment costs – they value these aspects in so many more ways than just a desk and a beautiful boardroom.”

Nonetheless the piece in this puzzle that has been missing in most parts of the Middle East, has been the business registration component. Companies still require an office space to register their business in most countries in the GCC, creating additional costs or raising the market entry barrier for entrepreneurs and start up creations.

In this regard, the Dubai DED’s decision to allow businesses to register on a desk has been a game changer. Servcorp has received a very significant inflow of inquiries to register their business on this new product, and are currently in exploratory discussions with the authorities of other GCC countries to allow similar advances, resulting in better ease of doing business and setting up a company, ultimately adapting to the requirements of the future of office space.

-Ends-

Founded in Sydney in 1978, Servcorp is the world leader in premium flexible office space and co-working solutions, operating 160 floors in prime city locations in 24 countries and offering cutting edge technology, and integrated services to 40,000 clients globally. Servcorp clients are all connected with each other through one of the largest qualified business community in the world. They use the Servcorp eco-system and suite of flexible services to lower their overhead costs while focusing on what they do best.

© Press Release 2019

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